Opinion: USPS doesn't need money from Congress, it needs financial reform
COVID cases are spiking, millions of Americans are out of work through no fault of their own, and emergency benefits are expiring. While Congress and the administration are right to pursue a fifth COVID relief package, the stakes are high for getting the money to where it is most needed. It is also not too soon for America to get back on the road to some sort of fiscal responsibility.
The U.S. Postal Service, which is part of the federal government, offers an intriguing case study both of what the U.S. government has done right during the pandemic and of how political demagoguery and fiscal irresponsibility know no bounds in Washington.
First, the good news. Throughout the nine-month pandemic, postal workers have carried on with poise and resolve, delivering mail and packages throughout the country, lessening the pandemic’s hardship for many. Postal workers have adopted new practices, such as using personal protective equipment and installing plastic barriers and social distancing parameters within post offices.
USPS received targeted help from the federal government in the pandemic’s early days via a $10 billion line of credit as part of the March 27 CARES Act. And there is more good news: USPS has not had to tap these funds as it has more cash on hand – more than $14 billion as reported for the end of fiscal year 2020 — than at almost any time in recent history. And in October, USPS had net income of $405 million, likely the result of record volumes of election mail.
So why are many in Congress now pushing to give USPS at least a $10 billion grant, a provision widely reported to be in the “bipartisan” COVID proposal? The short answers are (a) politics and (b) it is less than $25 billion.
In April, USPS made an audacious request for $75 billion in assistance from the House of Representatives Committee on Oversight and Reform. Reportedly, congressional Democrats pressured USPS to ask for much more than it was originally requesting. USPS also warned that operations could grind to a halt by September if it did not receive substantial assistance.
In August, the House passed $25 billion in assistance during a special session. The Senate did not pass the measure and the Postal Service operated through September and the election, where mail-in voting was widespread.
USPS does have major, systemic financial issues that need to be addressed. It has lost money for 13 consecutive years, defaulted on more than $48 billion to the federal government, and its consolidated balance sheet shows that its liabilities are projected to exceed assets by $163 billion.
What USPS needs from Congress is reform that ensures it operates on a break-even basis, as it once did. Congress has been loath to do this despite repeated warnings from the Government Accountability Office, which has had USPS on its high-risk list of government agencies since 2009.
Getting to financial stability starts with identifying and defining USPS’s Universal Service Obligation, or core mission. Some USO services, such as mail for the blind, will merit public assistance or subsidies.
Most USPS services, though, should be paid for entirely by those who use the service. Senior citizens on a fixed income in Nebraska should not have to subsidize packages for urban millennials who would rather order online, and receive home delivery, than go to a store. To eliminate such unfairness, modern cost-allocation and pricing systems will need to be implemented, something USPS’s Office of Inspector General has called for since 2014.
To protect taxpayers, and to keep the heat on Congress to make true postal reform, the next COVID package should not include money for USPS. Rather, the funds should be put toward helping those who are out of work and facing catastrophe.
Paul Steidler is a senior fellow with the Lexington Institute, a public policy think tank in Arlington, Virginia. He wrote this for InsideSources.com.